Air Products and Chemicals, Inc. offers atmospheric gases, process and specialty gases, performance materials, and equipment and services worldwide. The company is member of the S&P 500, Dow Jones Industrials and the S&P Dividend Aristocrats indexes. Air Products and Chemicals has paid uninterrupted dividends on its common stock since 1954 and increased payments to common shareholders every year for 28 years.
Over the past decade this dividend stock has delivered an average total return of 11.80% to its shareholders.
The company has managed to deliver a 20.20% average annual increase in its EPS over the past decade, largely due to low earnings in 2000. Analysts are expecting an increase in EPS to $4.98 for 2010 and $5.63 by 2011. This would be a nice increase from the 2009 earnings per share of $3.
The company is one of the largest producers of industrial gases and also owns a large specialty chemicals business. The potential areas of growth include growth in industrial gases, including electronics, hydrogen for petroleum refining, health care and Asian operations. The market for industrial gases gas increased at double the rate of the economy over the past years, which could be another driver of revenue growth. Air Products and Chemicals has announced its intent to acquire Airgas (ARG) in an unfriendly take-over in February 2010. This deal could benefit the company through cost savings if successful.
The Return on Equity has been stable around 15% over the past decade. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
Annual dividend payments have increased by an average of 10.30% since 2000, which is lower than the growth in EPS. The company last raised its dividend by 8.90% in February 2010, for the 28th year in a row.
A 10 % growth in dividends translates into the dividend payment doubling every seven years. If we look at historical data, going as far back as 1983, Air Products and Chemicals has indeed managed to double its dividend payment every seven years on average.
The dividend payout ratio remained below 50% for the majority of the past decade, with the exception of 2000 and 2009. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Air Products and Chemicals is trading at 17.30 times earnings and yields 2.90%. In comparison Praxair (PX) trades at a P/E multiple of 19 and yields 2.40%. I consider Air Products and Chemicals attractively valued at the moment.
Full Disclosure: Long APD
- Coca Cola (KO) Dividend Stock Analysis
- 3M Company (MMM) Dividend Stock Analysis
- United Technologies (UTX) Dividend Stock Analysis
- Emerson Electric (EMR) Dividend Stock Analysis
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections...
Investors who are looking for quality stocks that regularly raise dividends have several lists available as a starting point in their ...
My investing goals are very simple – to cover my expenses from dividend income generated from my portfolio. In order to translate goals in...
Every dollar that you have in your possession can be traced back to you exchanging your labor for money. The labor you provided was essentia...
I have highlighted below several frequently asked questions about dividend investing. This is not an all inclusive list, but more of a runn...
There are many misconceptions about dividend investing. I have tried itemizing several of them, outlining them, and providing a brief comm...
Motif Investing is an established brokerage which lets investors create their own portfolios, and purchase them for a set commission. Each...
There are four key attributes that need to be considered, in order to be successful at dividend investing. These ingredients include focusin...
There are two schools of thought when it comes to dividend reinvestment. One of the options is to automatically reinvest dividends , wherea...
I have been writing about dividend growth investing since January 2008. I often get asked questions by readers. Many of those questions in...